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S&P: Graham-Cassidy 'would hurt the economy, states, health insurers'

The bill, if approved, would be costly for states if they try to increase insurance to balance federal cuts, a Standard & Poor's report released Tuesday says: "We expect greater disparity among states," between those helping with insurance premiums and those that won't.

U.S. Sen. Lindsey Graham (R., S.C.) speaks as Sen. Bill Cassidy (R., La.), Sen. Dean Heller (R., Nev.), and Sen. Ron Johnson (R., Wis.) listen during a Sept. 13 news conference on health care on Capitol Hill in Washington.
U.S. Sen. Lindsey Graham (R., S.C.) speaks as Sen. Bill Cassidy (R., La.), Sen. Dean Heller (R., Nev.), and Sen. Ron Johnson (R., Wis.) listen during a Sept. 13 news conference on health care on Capitol Hill in Washington.Read moreOlivier Douliery/Abaca Press/TNS

The Affordable Care Act, also known as Obamacare, attempted "standardization, increased access, and increased federal funding of health care," writes Standard & Poor's in a report released Tuesday. Republican-led "repeal and replace" bills have two goals, the report says: "reduced federal funding of health care by switching to a defined-contribution system (such as block grants, per-capita caps), and providing increased flexibility to the states to use these federal funds."

The bill backed by President Trump, now known as Graham-Cassidy-Heller-Johnson, does that, S&P's report says, but the resulting "lower funding would hurt the economy, states and health insurers." On Tuesday, Republican leaders said the bill would not be voted on.

The Republican proposal would have replaced the new Medicaid funding with state block grants and set up per-capital limits, "significantly reduc[ing] the federal burden for health care" rules and let states set up and fund their own, if they want to.

Graham-Cassidy would have cut federal insurance funding for people making up to four times the federal poverty level, probably resulting in many of them losing insurance, unless states move in, the report states. S&P also estimates "580,000 lost jobs and $240 billion in lost economic activity" over the next 10 years due to a drop in health-care payments, "ensuring that the GDP growth remains stuck in low gear of around 2% at best in the next decade."

That would have also been costly for states if they tried to increase insurance to balance federal cuts, S&P says: "We expect greater disparity among states," between those helping with insurance premiums and those that won't.

Insurers face "increased uncertainty in the short term with repeal of mandate and lack of clarity around cost-sharing reductions," the report says. "In the longer term, likely return of medical underwriting" — meaning you will pay more for insurance if you have a pre-existing condition — "will make premium pricing more varied by morbidity" (your likelihood to die).

"Also, we expect a selective approach to insurer participation depending on each state's version of the health insurance market."